Cleveland Clinic-Oscar Health pairing is exceeding hopes

Oscar Health and Cleveland Clinic are looking to capitalize on the initial success of their co-branded insurance product as they enter into their second year as partners.

The partnership, which marked the Clinic's first heavy play in the insurance business, vastly exceeded expectations in the first year, securing what they estimate to be a 15% share of the individual market in the 2018 open enrollment season.

They enrolled more than 11,000 members — three times what they expected.

While the partners are remaining in the same five Northeast Ohio counties for their second open enrollment — Cuyahoga, Summit, Lorain, Medina and Lake — there may be some opportunity to grow even more.

Michael Harrington, chief accounting officer and controller at the Clinic and interim executive director of market and network services, said the partners expect a growth rate of 10% to 20% in members. He believes the "Cleveland Clinic | Oscar" plan can pick up some members from Medical Mutual of Ohio, which is offering a narrow network that excludes the Clinic.

"And so we're thinking there could be some upside to those estimates because I think folks historically might have opted into that plan and not fully realized they wouldn't have access to the Cleveland Clinic," Harrington said.

Oscar and Cleveland Clinic's teamup posted a loss of $1.4 million in 2017, attributable to startup costs, Harrington said. In the first half of 2018, though, they reported net income of $1.8 million. Though financial statements through September are not yet publicly available, Harrington said those numbers are "tracking almost right on where we thought we would be."

The financial statements also show that members dropped from the first quarter to the second quarter of this year, from 11,022 to 10,762 members. He attributes this to normal attrition from members who perhaps can't make the payments or found a job and got covered through their employer.

Harrington said the partners are being cautious in any rapid expansion, in part due to a reconciliation process among participants in the marketplace that takes place roughly nine months after the year closes, Harrington said. Insurers are either a receiver of a risk adjustment payment, or a payer, he said.

"We don't want to get too far ahead of ourselves if all of the sudden that risk adjustment comes out and it may not be favorable to us," Harrington said. "In talking to folks that are in the business, you're constantly having to make decisions about the next year before you understand how the current year is performing, ultimately performing. So we're being cautious in terms of any significant expansion of membership until we really have a good understanding of how we are doing in '18, which we won't know until sometime later in '19."

Separate from its partnership with the Clinic, Oscar is expanding with several new markets, including the Columbus area, where it is partnering with Mount Carmel Health System in Franklin, Delaware, Fairfield and Licking counties.

Dr. Dennis Weaver, chief clinical officer for Oscar, said that the "overwhelming support" Oscar has seen in Cleveland was one of the key pieces of the decision to expand to Columbus.

"The other thing that we really find is that the Ohio community has embraced who we are," he said. "We are a consumerized health plan; we engage big time with our members; we're technology driven to have a digital engagement as well as a personal engagement with our members. I think one of the things that we're finding is just the satisfaction rates and the member experience that people are reporting to us has been so solid in Ohio that we see Ohio as a wonderful place to expand."

Oscar, founded six years ago, is known for its use of technology, telemedicine and concierge teams to support patients and members. As of September, 84% of members had created an online profile, and 77% had contacted their concierge team via a call or a secure message.

Harrington said he doesn't foresee the Columbus expansion impacting the Clinic's work in any direct way, but he said that over time there could be some benefit to Oscar's growing network. Oscar's move into Columbus sets up an opportunity for a broader potential network of providers to support members. There would have to be formal agreements, and no real discussions have taken place at this time, but Harrington points to this as a possible benefit.

Oscar also plans to expand into the Medicare Advantage market in 2020, with the help of a $375 million investment from Google's parent company, Alphabet. Weaver said the move makes sense for the insurance company because it's the other space in health care where the consumer makes the decision about what they buy. Oscar is not yet making public comments about which markets they'll be entering in this space.

As for the future of growth in Northeast Ohio, Weaver declined to share whether the two are looking to expand beyond the five counties where the plan currently is offered.

"The relationship with the Clinic is absolutely wonderful at this point," he said. "And so we are always having conversations about what's the best next step, but we're not making public comments about what's next beyond the markets we've announced for 2019."